Correlation Between XOMA and SiriusPoint

Can any of the company-specific risk be diversified away by investing in both XOMA and SiriusPoint at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining XOMA and SiriusPoint into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between XOMA Corporation and SiriusPoint, you can compare the effects of market volatilities on XOMA and SiriusPoint and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in XOMA with a short position of SiriusPoint. Check out your portfolio center. Please also check ongoing floating volatility patterns of XOMA and SiriusPoint.

Diversification Opportunities for XOMA and SiriusPoint

0.49

Correlation Coefficient

XOMA  SiriusPoint

Very weak diversification

The 3 months correlation between XOMA and SiriusPoint is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding XOMA Corp. and SiriusPoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SiriusPoint and XOMA is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on XOMA Corporation are associated (or correlated) with SiriusPoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SiriusPoint has no effect on the direction of XOMA i.e., XOMA and SiriusPoint go up and down completely randomly.

Pair Corralation between XOMA and SiriusPoint

Assuming the 90 days horizon XOMA is expected to generate 1.98 times less return on investment than SiriusPoint. In addition to that, XOMA is 1.24 times more volatile than SiriusPoint. It trades about 0.09 of its total potential returns per unit of risk. SiriusPoint is currently generating about 0.21 per unit of volatility. If you would invest  2,469  in SiriusPoint on September 2, 2024 and sell it today you would earn a total of  103.00  from holding SiriusPoint or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

XOMA Corp.  vs.  SiriusPoint

XOMA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XOMA Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, XOMA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

SiriusPoint

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SiriusPoint are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, SiriusPoint is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with XOMA and SiriusPoint

The main advantage of trading using opposite XOMA and SiriusPoint positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XOMA position performs unexpectedly, SiriusPoint can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SiriusPoint will offset losses from the drop in SiriusPoint's long position.

The idea behind XOMA Corporation and SiriusPoint pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.